Friday, March 7, 2008

Jim "Willy Wonka" Flaherty & his hypocrisy factory


Jim Flaherty had the potential to be something better than Canada’s worst finance Minister ever, if he had only taken an afternoon to learn the difference between "tax deferred" and "tax exempt". Failing which, he has proven himself to be a financial Neanderthal and complete hypocrite. Allow me to explain.

“Tax exempt” means that taxes are never paid or collected

“Tax deferred”
means that taxes are paid and collected at a later date.

This is where Jim Flaherty comes in. God help us all.

Jim Flaherty claims RRSPs are "tax exempt", when in reality they are "tax deferred".

It is clear that Jim Flaherty has a hate on for RRSPs. This is why he double taxes income trusts in RRSPs.

His logic is:

“As Minister of Finance, I have a fiduciary obligation to the taxpayers of Canada today, not tomorrow, an obligation to pay for needed social, environmental and economic programs today, not tomorrow. I cannot, and I will not, fund today's programs from tomorrow's revenues”

This is where Jim Flaherty’s hypocrisy factory come in:

Jim Flaherty however tries to rationalize that Ontario Teachers’ buying BCE in debt levered buyout is okay, since:

"The purpose of the pension funds, ultimately, is to ensure they can honour their pension obligations. And there is taxation, of course, when pensions are paid out,"

Why then doesn’t that same logic apply to RRSPs and income trusts?

Flaherty isn’t fooling anyone. Here’s what Laurence Booth, an expert in structured finance at Toronto's Rotman School of Management had to say, and who likened the Finance Minister's efforts to stem tax leakage to the title character in a Dutch legend.

"[Flaherty] is a bit like the Dutch boy who has his finger in the dyke. He plugs one hole but then, bingo, another hole pops up."

As such Flaherty thought it was okay to impose a $35 billion loss on Canadians' retirement savings with this lame logic of his and by treating tax deferred RRSPs as if they were tax exempt.

So what does he do for an encore?

He introduces the Tax Free Savings Account. Tax free meaning "tax exempt",as in no taxes ever paid or collected. Tax exempt meaning: “As Minister of Finance, I have a fiduciary obligation to the taxpayers of Canada today, not tomorrow, an obligation to pay for needed social, environmental and economic programs today, not tomorrow. I cannot, and I will not, fund today's programs from tomorrow's revenues”

Sheesh!

Flaherty is deserving of the Lifetime Achievement Award for Hypocrisy in a Leading Role.

Now we learn that Flaherty is opposing the measures passed by the House that would make the $5,000 allowable contributions to Registered Educational Savings Plans eligible for tax deferred status:

Ottawa vows to block education tax shelter

This from the very person who introduced the $200,000 Registered Disability Savings Plan in Budget 2007.

Let’s recap Flaherty;s hypocrisy:

Income trusts in RRSPs: "Bad", since they are tax deferred

Income trusts in pension plans: "Good", since they are tax deferred

Investments in Tax Free Savings Accounts: "Good", since they are tax exempt

Savings in Registered Educational Savings Plans: "Bad", since they are tax deferred

Savings in Registered Disability Savings Plan: "Good", since they are tax deferred


This type of hypocrisy is only lacking a name to make it acceptable. Might I suggest “leveling the playing field” or “Tax Fairness Plan”, or maybe the more accurate description would be "Registered Disability Savings Plan, Writ Large."

11 comments:

Anonymous said...

Correct me if I am wrong, but wasn't Flaherty the same asshole who introduced tax credits for private school education while he was Minister of Fraud in Ontario?

Oh yeah, he had three sons in private school at the time. Makes perfect sense for the utter hypocrite and self-serving person that he is.

Anonymous said...

Anonymous:

Yes, he was that "asshole":

Brent Fullard

Last Updated: Thursday, June 7, 2001 | 10:08 AM ET

CBC News


The Minister of Finance has come out against putting a means test on its controversial tax credit for private school tuition.
The idea of a means test was first suggested by Tory backbencher Ted Arnott, and it seems to have picked up some support. Arnott says it isn't fair that people who earn, more than $60,000 would get the tax credit.

FROM JUNE 6, 2001: School tax credit may be off limits to rich <

On Tuesday, Jim Flaherty said he would consider a means test. The next day, Premier Mike Harris said he didn't like the idea and Flaherty agreed.

"Personally, I'm not inclined to that kind of conclusion, that we would discriminate against people on the basis of income, for the simple reason that we already do that. We already ask people with higher incomes to pay more," he said.

Ontario's Liberal leader, Dalton McGuinty, agrees there should be no means test ˆ but for different reasons. He opposes the tax credit completely, and says a means test won't make it any more palatable.

"Absolutely not. They're trying to limit now the amount of money they're taking out of public education. I suggest taking a single dollar out of public education and putting that into private schools is a bad idea," said McGuinty.

Ontario Minister of Education Janet Ecker, says the means test will probably be one of the things suggested in the public hearings on the bill, which start Friday in St. Catharines.

Dr Mike said...

Either Jim actually believes he is completely right in his logic & his facts or he thinks we are too stupid to know that what he did was absolutely wrong.

Either he is clueless or he is a sham.

Either way , we are screwed & nothing will be done to correct any of this unless drastic changes do take place either within the Conservative party or by a change in ruling parties.

We seem to spend all our time "Wishin & Hopin" for a resolution.

All I know is , it won`t occur by any changes coming out of the Conservative party.

Mike.

Robert Gibbs said...

Mathematicians Have Formulated New Equation To Calculate Flaherty's Geometry Of Hypocrisy

A well respected scientific journal is reporting that Canadian mathematicians have formulated a new equation to calculate Jim Flaherty's geometry of hypocrisy.

The formula is expressed in the following equation:

a^2 = b^2 + c^2

where:

a = "asshole"
b = "bastardization"
c = "cock-and-bull story"

These mathematicians have tested their theory in the "real world" by inputting all statements uttered by Flaherty into the formula and have found the equation to hold true 100% of the time.

Of course, funding for the study was not provided by the Conservative government.

Robert Gibbs said...

Economists say there may be no manufacturing crisis in Ontario and Quebec.

With all the lies, hypocrisy and corruption being manufactured by the CON government, this may take care of the situation.

Randy Meyer said...

The only thing more inept and ridulous then Flaherty is our so called "free" press.

It brings a whole new meaning to what you get is what you pay for. "Free" press. Anything but free.

Mary the golfer said...

An Asshole :

"insulting terms of address for people who are stupid or irritating or ridiculous".

Right , Right , & Right!!!!!

Mary P.

Robert Gibbs said...

TheStar.com
Susan Delacourt on Politics

March 06, 2008

Tense and ugly affairs

Last night, BlackBerries in Ottawa were buzzing when CBC and CP confirmed that Ian Brodie, the Prime Minister's chief of staff, was indeed the source of all the trouble for Barack Obama's "Canada problem" in the U.S. presidential race. This is huge. We are expecting reverberations today.

Readers will remember that this is the second time Brodie has been outed, so to speak. Last week, ABC News in the U.S. also reported that Harper's chief of staff was the leaker. ABC reported that the confirmation came from someone "close to the Prime Minister." Now we're getting a second confirmation, this time from the CTV reporters who received the leak. Brodie apparently was chatting to a clutch of CTV reporters in our federal budget lockup last week, they passed the news to their Washington counterparts, and thus, Obama's troubles began.

And so, if Harper is looking to "get to the bottom" of this international incident, he need only look at the next office over.

A couple of things that shouldn't get lost in today's firestorm:

1. Brodie apparently also told CTV that Hillary Clinton offered similar reassurances to Canada - that all this talk of NAFTA was just campaign rhetoric. So why did CTV only pursue the Obama angle? And interestingly, CTV had not a word to say about this developing story on its news last night - at least the one I viewed at 10 p.m.

2. Clinton's officials are confirming that this incident helped seal Obama's poor results in the Ohio primaries. That's serious too. Obama will remember Canada, and not in a nice way.

3. In ordinary times, heads should roll in Ottawa for how this government has responded to this incident and the whole controversy over whether a $1-million life-insurance policy was offered to the late MP, Chuck Cadman. The statements in the Commons and from the PMO to reporters, to be diplomatic, have hovered at the fringes of out-and-out untruths. I didn't write that last sentence lightly. These are tense and ugly affairs and many of us will be writing about them in the days to come.

Robert Gibbs said...

EDITORIAL
TheStar.com

Flaherty's fallacy on Ontario taxes

Mar 09, 2008 04:30 AM

When times are tough – and they certainly are getting tougher in Ontario right now – the first obligation of government is to sustain the services and programs on which people depend: health care, education, social assistance and job training, to name just a few.

When every dollar is stretched to the limit, as it is likely to be at Queen's Park in the coming year, the last thing the province can contemplate is any kind of tax cut. That is why federal Finance Minister Jim Flaherty's endless tirade about the level of business taxes levied by the Ontario government is so mendacious.

Flaherty's attack on Premier Dalton McGuinty's Liberal government is as partisan as it gets. He's using taxes to pin the blame on McGuinty for the slowdown that is hitting Ontario. The real culprits are a too-high dollar, soaring energy prices and recession in the U.S.

That said, it is true that business taxes are higher in Ontario than in many jurisdictions with which it has to compete. The province's general corporate tax rate is 14 per cent, compared, for example, with 11.4 per cent in Quebec and just 10 per cent in Alberta and British Columbia.

Ontario businesses also pay the 8 per cent provincial sales tax on the inputs they buy. Although most Ontarians think of the PST as a consumer tax, 40 per cent of its revenue comes from the business sector. In Quebec, where the provincial sales tax is harmonized with the GST, businesses aren't taxed on their inputs.

But if it is to cut business taxes and keep its budget balanced, the Ontario government will have only two options: raise other taxes, such as the personal income tax, or cut program spending.

Surely tax-fighter Flaherty doesn't endorse a hike in other taxes by Queen's Park. Nor does he favour budget deficits. So, he must believe the province should cut its spending.

But there's a major problem with that approach.

According to a 2006 study by the TD Financial Group, Ontario ranks dead last among provinces in per-capita government spending. It also stands 10th in spending on the all-important area of education.

But how can it be that the province with one of the highest taxes on business is the lowest when it comes to spending?

For the answer to that paradox, one need only look at Flaherty's own books. In addition to the taxes they collect, all provinces get revenue in the form of transfer payments from the federal government. This year, Ottawa will give the provinces and territories $46 billion.

In last year's budget, Flaherty provided details on the recipients of that money. Here's what the broken-down numbers say:

Although Ontario taxpayers contributed roughly 40 per cent of the cash Ottawa gave to the provinces and territories last year, Ottawa returned only about 25 per cent of that cash to Ontario.

And here's what those numbers mean:

Through their federal taxes Ontarians are either paying for the higher levels of per-capita spending in other provinces or they are paying for the lower provincial business taxes in other provinces – or both.

Flaherty has a lot of nerve telling McGuinty that he should lower business taxes in this province when Ottawa takes so much more money out of Ontario than it puts back in. For 2005, the most recent year for which numbers are available, the excess of Ottawa's take from Ontario over what it pumps back in was equivalent to 4 per cent of the province's GDP. With that 4 per cent drag on its economy, it is hard to see how Ontario is supposed to compete with jurisdictions that do not experience anywhere near that kind of burden.

Flaherty could have made it much easier for Ontario either to lower its corporate income tax or to harmonize its sales tax with the GST had he transferred to the provinces one percentage point of the GST last fall. Instead, Flaherty simply cut the GST by a percentage point, which did nothing for the competitiveness of Ontario or Canada.

Given his role in Ontario's predicament, he is in no position to lecture McGuinty now.

Anonymous said...

I must commend you for facilitating these conversations and fighting for something you believe in and are passionate about. I do have one issue with your CAITI organization. I do think it is not in your best interest to call people,like Jim Flaherty, "assholes" and other rude names. What is up with the personal attacks? How many of you actually know the man or spent time getting to know the man himself? Not his politics, but the man? I doubt any of you. I fully support your mission in that everyone has the right to fight for what they believe in. But, name calling and personal attacks do not help your cause or give your group credibility. Then again, your blog is basically for your special interest group - the majority of Canadians are not affected by the Income Trust issue. Most people don't even know what the issue is about. So, it is basically only your group reading these blogs. But, having said that, I would give you some advice - Stick to the issues. I have no issue with you being very angry with the Government or the representatives of the govt. I fully understand that. But, the personal attacks on someone like Jim who is a very decent man - a wonderful father, husband, citizen and friend, is wrong. Thanks for letting me have my say.

Randy Meyer said...

I have an easy solution for the the CONservatives on how to fund the RESP tax deduction proposal by the Liberals:


Use all of those lost tax "leakage" dollars you're going to gain once Income Trusts start paying (double) tax. It seems to me that amount the CONservatives claimed was lost is about equal to the cost of the RESP deduction scheme.

Of course, my idea would only work if there were actually addtional taxes to be had by the CONseravtives double tax. But, hey the CONservatives and Flaherty himself are adamant that they'll collect way more tax money. What's the problem then? Maybe this will even help me re-fund my kids RESP after it was decimated by the CONervatives.

(I also have some land in Florida ... once your use to the gators .. it's ok really!)